New orders for long-lasting U.S. manufactured goods unexpectedly fell in October to post their largest decline in nearly two years and business capital spending plans dropped, according to a government report on Wednesday that pointed to a slowdown in factory activity. The Commerce Department said durable goods orders tumbled 3.3 percent, the largest decline since January 2009, after surging by a revised 5 percent. Economists had expected orders to be flat in October after a previously reported 3.5 percent jump. Durable goods orders are a leading indicator of manufacturing and the report suggested factory activity could be faltering.

Manufacturing in the New York region unexpectedly contracted in November for the first time in more than a year, a warning sign the industry that led the economy out of the recession may again be cooling. The Federal Reserve Bank of New York’s general economic index fell to minus 11.1 from 15.7 in October. Readings less than zero signal contractions in the so-called Empire State Index, which covers New York, northern New Jersey and southern Connecticut. Economists forecast the measure would fall to 14 this month, according to the median projection in a Bloomberg News survey.

During the third quarter of 2010, hourly compensation from previous quarter, annual rate (preliminary) was up 0.1 percent in total manufacturing, down 1.0 percent in durable manufacturing and up 1.6 percent in nondurable manufacturing.

In the third quarter of 2010, hourly compensation of all manufacturing workers decreased 0.9 percent, compared to a 5.2 percent increase during the third quarter of 2009. Real hourly compensation in the total manufacturing sector decreased 2.1 percent in the third quarter of 2010, compared to 6.9 percent increase in the third quarter of 2009.

In the second quarter of 2010, manufacturing profits increased 10.7 percent, or $26.7 billion, to $277.1 billion from $250.4 billion in the first quarter. Compared with second quarter profits of 2009, manufacturing profits were up $137.4 billion in the second quarter of 2010. (Note: The manufacturing profits for third quarter 2010 will be updated in the next release.)

Third quarter 2010 profits for all non-financial industries (manufacturing being a subcategory) increased 1.7 percent from the second quarter of 2010 to $1,051.6 billion.

In October 2010, manufacturing industries (NAICS based) operated at 73.0 percent of capacity, 6.0 percentage points below their 1972-2009 average of 79.0 percent and 0.4 percent points higher than their revised capacity utilization level in September 2010.

Manufacturing sector productivity (premilinary) rose 0.4 percent in the third quarter of 2010, as output increased 4.0 percent and hours increased 3.6 percent. Productivity was down 0.8 percent in the durable goods industries and up 2.9 percent in the nondurable goods industries. Unit labor costs in manufacturing declined 0.3 percent in the third quarter of 2010 and fell 4.6 percent over the last four quarters.

In durable goods industries, productivity (preliminary) was down 0.8 percent from previous quarter, as output increased 5.6 percent, while hours worked also increased 6.4 percent.

In nondurable goods industries, productivity (preliminary) was up 2.9 percent from previous quarter, as output increased 2.2 percent, while hours worked also decreased 0.7 percent.

Economic activity in the manufacturing sector expanded in October for the 15th consecutive month, and the overall economy grew for the 18th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

Manufacturing continued to grow in October, and at an accelerated rate as the PMI registered 56.9 percent, an increase of 2.5 percentage points when compared to September's reading of 54.4 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

The percentage-point changes in the components of the PMI in October were: New Orders increased 7.8 points to 58.9, Production increased 6.2 points to 62.7, Employment up 1.2 points to 57.7, Inventories down 1.7 points to 53.9, and Supplier Deliveries down 1.1 points to 51.2.

Prepared by
Director of Office of Trade Industry Information
Manufacturing and Services
International Trade Administration
U.S. Department of Commerce
(202) 482-4691

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